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CIRCULAR No

CIRCULAR No.81/2000/TT-BTC OF AUGUST 2, 2000 GUIDING THE SETTLEMENT OF VALUE ADDED TAX APPLICABLE TO SUGAR MILLS

Pursuant to the Prime Minister�s Decision No.65/2000/QD-TTg of June 7, 2000 on the reduction of payable value added tax (VAT) for sugar-producing enterprises, the Finance Ministry hereby guides the implementation thereof as follows:

I. SUBJECTS ELIGIBLE FOR BEING CONSIDERED FOR VAT REDUCTION:

1. The cane sugar-producing enterprises that pay VAT by the tax deduction method and meet difficulties in their production and business activities, which cause losses, shall be considered for reduction of payable VAT on sugar products, by-products and waste materials reclaimed in the sugar production process (leaked molasses, cane residues, sludge residues), hereinafter collectively called reclaimed waste materials.

2. Enterprises that produce sugar and at the same time, turn out some other by-products shall have to separately account the business result of each kind of product. In cases where a sugar-producing enterprise turns out some other by-products from reclaimed waste materials (micro-biological fertilizer, pressed boards...) but fails to separately account the business result of each commodity product, the VAT reduction level for sugar product and reclaimed waste materials shall be equal to its loss amount arising in the year but must not exceed the payable VAT on such product.

II. VAT REDUCTION LEVELS:

1. In 1999, the payable VAT reduction amount shall be equal to the loss amount but must not exceed the payable VAT amount in the year.

Payable Output VAT amount Deductible input VAT

VAT = on sugar product and sold-out - amount on sugar product and

amount reclaimed waste materials reclaimed waste materials

2. In 2000, a 50% reduction of monthly payable VAT amount shall be temporarily given for sugar product and sold-out reclaimed waste materials. When the annual final settlement is made, if the temporary reduction amount of monthly payable VAT is larger than the loss amount actually arising, only the payable VAT reduction amount equal to the loss amount is effected, while the difference (the temporary payable VAT reduction amount minus (-) the actual loss amount) must be remitted by the enterprise into the State budget within 10 days after the annual financial report is made according to the current regulations.

In cases where an enterprise has already had its payable VAT amount reduced by 50%, but still suffers from loss, it shall enjoy further reduction of its payable VAT amount at the level equal to the actual loss amount, provided that the maximum reduction level must not exceed the payable VAT amount in the year.

III. DOSSIERS FOR VAT REDUCTION CONSIDERATION:

Cane sugar-producing enterprises that suffer from losses shall make dossiers of application for tax reduction consideration, each comprising:

- An official dispatch requesting tax reduction, enclosed with the explanation of production costs, selling price without VAT and VAT on each product or goods item;

- The financial statement of the year for which it applies for tax reduction;

- The tax settlement report, which clearly states the payable VAT amount, temporarily reduced VAT amount and remaining VAT amount to be paid;

- A written appraisal after the tax settlement report is examined.

IV. THE PROCEDURAL ORDER AND COMPETENCE FOR CONSIDERING VAT REDUCTION:

1. The procedural order for considering VAT reduction:

Enterprises� tax reduction dossiers shall be sent to the tax authority directly managing the tax collection.

The tax authority that receives the dossiers shall have to examine such dossiers, verify the accuracy of data therein; and determine the results of production and sale of sugar products and sold-out reclaimed waste materials.

Within 15 days after the receipt of a complete dossier, the tax authority shall consider and issue a tax reduction decision according to its competence. In cases where a dossier falls beyond its tax reduction-deciding competence, it shall have to report such in writing to the superior tax authority requesting the latter�s consideration and settlement.

2. Competence for deciding tax reduction:

In 2000, the temporary 50% reduction of monthly payable VAT for the sugar products and sold-out reclaimed waste materials shall be effected on the basis of data declared to the tax authorities by the enterprises� directors themselves, who are held responsible before law for the accuracy of such data.

At the end of each fiscal year, based on the approved tax settlement, the competence for deciding the tax reduction shall be as follows:

- Any VAT reduction level of under VND 1 billion shall be decided by the director of the provincial/municipal Tax Department. The Tax Department shall have to notify its decision to the concerned unit and concurrently send one copy thereof to the General Tax Department instead of a report.

- Any VAT reduction level of VND 1 billion or more shall be decided by the General Director of Tax.

3. Settlement of existing problems:

a/ Waste materials (leaked molasses, cane residues, sludge residues), which are reclaimed and sold out, shall be subject to the VAT rate of 5% according to provisions at Point 2h of the Finance Ministry�s Circular No.49/2000/TT-BTC of May 31, 2000. In cases where value added invoices issued by a unit for its reclaimed waste materials it has sold out state a tax rate different from that prescribed above, such unit shall declare and pay tax according to the tax rate actually stated in such sale invoices.

b/ In cases where a cane sugar-producing enterprise suffered from losses in 1999, but the VAT amount on its sugar products and reclaimed waste materials it has paid to the State budget is higher than the payable level prescribed in the Prime Minister�s Decision No.65/2000/QD-TTg of June 7, 2000 and this Circular, the director of the concerned Tax Department shall issue a decision to reimburse the over-paid VAT amount to such enterprise. In case of under-payment, the enterprise shall have to remit promptly the deficit into the State budget.

c/ In the first six months of 2000, the cane sugar producing enterprises, which have not yet enjoyed the temporary 50% reduction of monthly payable VAT, shall be entitled to temporary 50% reduction of payable VAT of the first six months of 2000. In cases where the VAT amount already paid by an enterprise is larger than the payable tax amount (after the temporary 50% reduction has been effected), the difference shall be cleared against the payable tax amount of the three subsequent months. After 3 months, if the already paid VAT amount is not yet fully cleared, the director of the Tax Department shall issue a decision to reimburse VAT to the enterprise. In case of under-payment, the enterprise shall have to remit promptly the deficit into the State budget.

4. Summing up and reporting:

- Quarterly, the provincial/municipal Tax Departments that settle VAT for the cane sugar-producing enterprises shall have to make and send sum-up reports to the General Department of Tax on the last day of each reporting quarter.

- The General Department of Tax shall have to synthesize the data on VAT reduction for cane sugar producing enterprises, then report them to the Finance Ministry.

V. ORGANIZATION OF IMPLEMENTATION:

This Circular takes effect after its signing.

The concerned units are requested to report promptly any problems arising in the course of implementation to the Finance Ministry (the General Department of Tax) for study and settlement.

For the Finance Minister

Vice Minister
VU VAN NINH